Suresh P. Iyengar
Mumbai, Aug 1 : Binani Cement plans to invest $100 million in its newly acquired Chinese cement company Shandong Rongan Group Co Ltd that has a 0.4-million tonnes per annum (mtpa) capacity.
The company recently bought 49 per cent stake in the Chinese firm for $11 million. “Though holding a minority stake, we have been given management control. We will be raising our holding to 70 per cent by September and enhancing the company’s capacity to 2.2 mtpa in the next three years,” said Mr Vinod Juneja, Joint Managing Director, Binani Cement.
The Chinese company owns limestone reserves, which would be sufficient to cater to the needs for the next 30 years at the projected expanded capacity.
Binani Cement intends to tap the debt market soon for funding the China venture.
China produces about one billion tonnes of cement per annum, compared to 150 mtpa produced in India.
Interestingly, companies in Shandong province in China alone produce about 150 mtpa. China’s per capita cement consumption is higher at 900 kg per annum against India’s 106 kg.
“Even though cement prices are cheaper in China than India, price realisation per tonne is good there as production cost is lower. Quality power supply is assured by the Government, which saves our investment on captive power plant and fuel,” Mr Juneja said.
Though the Shandong Group is focused on the Chinese market, it has plans to tap Africa and West Asian countries for exports.
“We expect the strong Chinese demand to continue. We are also weighing the option of exporting to East Africa and Middle East, where there is a good demand,” he said, adding that they were not looking at exporting cement to India.
The company has a presence in Dubai with a production capacity of one mtpa.
Binani Cement has added additional production capacity of 2.2 mtpa at its existing facility in Udaipur, Rajasthan. “With this on steam since last fortnight, our total production is 6 mtpa, including 0.7 mtpa produced in Neem Ka Thana, Rajasthan,” Mr Juneja said.
The company caters to markets in Gujarat, Rajasthan, western Uttar Pradesh, Haryana, Delhi, Punjab and Uttarakha.